Understanding the genetic basis of adaptation to contemporary environments is fundamental to predicting the evolutionary responses of tree species to future climates. Using seedlings grown in a glasshouse from 275 open-pollinated families collected from 37 Tasmanian populations, we studied quantitative genetic variation and adaptation in Eucalyptus pauciflora, a species that is widespread in Tasmania and the alpine regions of mainland Australia. Most traits exhibited significant quantitative genetic variation both within and between populations. While there was little association of the trait-derived Mahalanobis distance among populations with geographic distance or divergence in putatively neutral markers (F ST ), there was strong evidence of climate adaptation for several genetically independent, functional traits associated with ontogenetic maturation, biomass allocation, and biotic interactions. This evidence comprised the following: (i) significantly more differentiation among populations (Q ST) than expected through drift (F ST ); (ii) little association of pairwise population divergence due to drift (F ST ) and trait divergence (Q ST); and (iii) strong correlations of functional traits with Q ST > F ST with potential environmental drivers of population divergence. Correlates with population divergence in quantitative traits include altitude and associated climatic factors, especially maximum temperature of the warmest period and moisture indices. It is argued that small changes in climate, such as a long-term 1 °C increase in the maximum temperature of the warmest period, are likely to affect the adaptation of local populations of the species. However, since there appears to be significant quantitative genetic variation within populations for many key adaptive traits, we argue that populations are likely to maintain significant evolutionary potential.